Perennial whipping bank Wells Fargo finds itself on the receiving end of a colossal fine and more bad press with the announcement Friday from the Consumer Financial Protection Act of a $1 billion sanction.
Together with the Office of the Comptroller of the Currency (OCC), and described in the consent order, the CFPB found that Wells Fargo “violated the Consumer Financial Protection Act in the way it administered a mandatory insurance program related to its auto loans.”
The Bureau also said found that Wells Fargo violated the CFPA in how it charged certain borrowers for mortgage interest rate-lock extensions.
Under the terms of the consent orders, Wells Fargo will “remediate harmed consumers and undertake certain activities related to its risk management and compliance management.”
The Bureau assessed a $1 billion penalty against the bank and credited the $500 million penalty collected by the OCC toward the satisfaction of its fine.
“I am especially pleased that we were able to work closely and effectively with our colleagues at the OCC, and I appreciate the key role they played in the negotiations,” controversial CFPB Acting Director Mick Mulvaney said in a statement. “As to the terms of the settlement: we have said all along that we will enforce the law. That is what we did here.”
The settlement is the latest in a long list of regulatory trouble for the bank, beginning with a “phantom” account scandal that led to the ouster of then CEO John Stumpf in 2016. PR headaches haven’t gotten better in the time since, with legal action and sanction related to a number of issues.
In March, Massachusetts Secretary of Commonwealth William Galvin opened an investigation into Wells Fargo Advisors, seeking “information related to inappropriate referrals of brokerage customers to managed and advisory accounts, unsuitable recommendations of alternative investments, as well as unsuitable referrals and recommendations in connection with 401k rollovers.”
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
